New framework shows how Indonesia’s energy transition can deliver economic and social benefits for all

Indonesia’s energy transition is already well underway. But a new report warns that without a stronger focus on people and communities, progress could come at a cost.

Released today by the Centre for Policy Development (CPD), Powering Prosperity: A framework for a fair and inclusive energy transition in Indonesia sets out a practical roadmap to help ensure the transition strengthens, rather than undermines, economic opportunity and community wellbeing across the country.

Indonesia faces mounting climate risks—including flooding, cyclones, and extreme heat—that are already threatening lives and livelihoods. The World Bank estimates that climate impacts could cost Indonesia up to 7% of GDP by 2100. At the same time, with an economy still heavily reliant on coal and other emissions-intensive industries, Indonesia must adapt to a global market shifting rapidly away from fossil fuels.

Recognising these challenges, the government has committed to a number of climate targets, including cutting emissions by up to 43% by 2030 and reaching net zero by 2060. But the report warns that without greater focus on the human side of the transition, these changes could deepen inequality, displace workers, and create risks for social and political stability—both in regions reliant on high-emissions industries and in areas experiencing new pressures from renewable energy projects and critical mineral mining.

Powering Prosperity argues that for Indonesia’s energy transition to succeed, it must go beyond reducing emissions and building new industries. It must also create real opportunities for all communities to benefit, especially those most at risk of being left behind.

The report outlines three core principles for delivering a fair transition:

• Ensure those affected by the transition have a voice: give workers and unions a seat at the table, let local authorities and communities lead regional transitions and actively consult households when developing transition plans.
• Ensure those who face vulnerability are not made worse off: protect vulnerable groups by ensuring energy is affordable, supporting access to renewables, and creating alternative employment for those impacted.
• Ensure the costs and benefits of the transition are shared equitably: make sure all households have access to better jobs and income in new industries, and that current generations aren’t overly burdened by high energy costs.

It also offers practical recommendations, including establishing a clear national vision supported by detailed policy roadmaps, creating a national coordinating body to help steer efforts, and developing strong workforce assessment and reskilling strategies. International collaboration will also be essential, particularly to support community engagement and workforce development.

Centre for Policy Development CEO Andrew Hudson said Indonesia’s energy transition is at a turning point, and success will depend on how well policies reflect the needs of people and communities.

“Indonesia has made progress on energy transition, but the true test will be ensuring that it benefits everyone.

“The government should  address the impacts on households, workers, and communities early. By doing this it can build stronger public support, unlock economic opportunity, and move faster and more confidently toward its climate goals.”

Senior Adviser Ruddy Gobel said the report shows a just transition is not only achievable, but already within reach.“We’ve seen how quickly Indonesia can mobilise around big national priorities. Now we need the same ambition to ensure communities are heard, supported, and can genuinely benefit from this transformation.“With the right strategy, Indonesia can show the world what’s possible when no one is left behind.”